D.C.I.T. RG.8(3), MUMBAI V. STATE STREET SYNTEL SERVICES PVT. LTD., MUMBAI

ITA 7610/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4416 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK OJHA
• Assessee Lawyers: DINESH VYAS
• Section: 143(3); 28

Judgement Text

N THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 7610/MUM/2011 (ASSESSMENT YEAR 2007-08) THE ASSTT. COMMISSIONER OF INCOME TAX- 8(3), ROOM NO.217, AAYKAR BHAVAN, MK MARG, MUMBAI 400020 PAN: AAICS0964Q ... APPELLANT VS. STATE STREET SYNTEL SERVICES PVT. LTD. (PREVIOUSLY KNOWN AS SYNTEL SOURCING PRIVATE LTD.,) B-101 TO 104, DELPHI, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI 400076 .... RESPONDENT APPELLANT BY : SHRI VIVEK OJHA RESPONDENT BY : SHRI DINESH VYAS DATE OF HEARING : 04/01/2016 DATE OF PRONOUNCEMENT : 06/01/2016 ORDER PER JASON P. BOAZ, A.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-18, MUMBAI DATED 02/08/2011 FOR ASST Y EAR 2007-08. 2.1 THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2 ITA NO. 7610/MUM/2011 (ASSESSMENT YEAR 2007-08) 2.1 THE ASSESSEE, A COMPANY ENGAGED IN PROVIDING BU SINESS PROCESS OUTSOURCING (BPO), IT ENABLED SERVICES, FILED IT S RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON 31/10/2007 DECLARING INC OME OF RS.53,23,340/-. THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND THE C ASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS CONCLUDE D UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED29/10/2010, WHERE IN THE ASSESSEES INTEREST INCOME OF RS.53,23,340/- WAS BROUGHT TO TA X IN THE ASSESSEES HANDS UNDER THE HEAD INCOME FROM OTHER SOURCES. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESS MENT YEAR 2007- 08 DATED 29/10/2010, THE ASSESSEE PREFERRED AN APPE AL BEFORE THE CIT(APPEALS)-18, MUMBAI. THE LD. CIT(A) ALLOWED TH E ASSESSEES APPEAL VIDE ORDER DATED 202/08/2011 FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE S SISTER CONCERN M/S.SYNTEL LIMITED IN ITA NO.3413/MUM/2007 DATED 3 1/8/2015 AND OF THE HONBLE MUMBAI HIGH COURT HOLDING THAT INTERES T INCOME EARNED BY THE ASSESSEE WAS DERIVED FROM ASSESSEES BUSINESS AND WAS TO BE CONSIDERED AS PART OF THE ASSESSEES BUSINESS INCOM E WHILE COMPUTING THE DEDUCTION UNDER SECTION10A OF THE ACT. 3.1.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CIT(APPEALS)- 18, MUMBAI DATED 02/08/2011 FOR ASSESSMENT YEAR 200 7-08 HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS :- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING INTEREST INCOME OF RS.53,23,340/- AS PROFITS ELIGIBLE FOR DEDUCTION U/S.10A/10B THOUGH THE SAME WERE NOT DERI VED FROM EXPORT OF ITES SERVICES WITHOUT APPRECIATING THE FACTS OF THE CASE.', 3 ITA NO. 7610/MUM/2011 (ASSESSMENT YEAR 2007-08) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE RATIO, OF THE JUDGEME NT OF THE HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA LTD. VS. CIT (31 7 ITR 218) WHEREIN IT IS HELD THAT CERTAIN INCOME MAY CONSTITUTE PROFIT FROM BUSI NESS UNDER SECTION 28 BUT IT CANNOT BE CONSTRUED AS PROFITS DERIVED FROM INDU STRIAL UNDERTAKING AND THE DECISION OF HON'BLE ITAT, 'E' BENCH, MUMBAI, IN THE CASE OF TRICOM INDIA LIMITED VS. 'ACIT (36 SOT 302) WHEREIN IT IS HELD T HAT INTEREST INCOME IS NOT ELIGIBLE FOR DEDUCTION U/S.10A/10B'. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ITO/ACIT/DCIT BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3.1.2 THE LD. DEPARTMENTAL REPRESENTATIVE APPEARIN G FOR THE REVENUE WAS HEARD IN SUPPORT OF THE GROUNDS RAISED (SUPRA). HE PLACED STRONG RELIANCE ON THE ASSESSING OFFICERS ACTION IN TREA TING THE INTEREST INCOME EARNED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES, SINCE IT WAS NOT DERIVED FROM THE ASSESSEES BUSINESS OF EX PORT OF ITES SERVICES AND, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S.10A OF THE ACT. 3.2 PER CONTRA, THE LD. REPRESENTATIVE FOR THE ASSE SSEE STRONGLY CONTENDED THAT THERE WAS NO ERROR IN THE IMPUGNED O RDER OF THE LD. CIT(A) AS HE HAD FOLLOWED THE JUDICIAL PRECEDENT IN THIS REGARD. IT WAS SUBMITTED THAT THE SAME ISSUE OF WHETHER THE INTERE ST INCOME EARNED BY THE ASSESSEE WAS TO BE TREATED AS BEING DERIVED FROM THE ASSESSEES BUSINESS AND, THEREFORE, ENTITLED TO BE ELIGIBLE FO R DEDUCTION UNDER SECTION 10A OF THE ACT WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEES SISTER CONCERN, M/S. SYNTEL LIMITED IN I TA NO.3413/MUM/2007 DATED 31/8/2015. THE LD. REPRESEN TATIVE FOR THE 4 ITA NO. 7610/MUM/2011 (ASSESSMENT YEAR 2007-08) ASSESSEE SUBMITTED THAT IN VIEW OF THE ABOVE, REVEN UES APPEAL WAS LIABLE TO BE DISMISSED. 3.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL DECISIONS CITED. WE FIND THAT THE VERY SAME ISSUE AS THE ISSUE BEFOR E US HAS BEEN CONSIDERED AND DECIDED BY A CO-ORDINATE BENCH OF TH IS TRIBUNAL IN THE CASE OF THE ASSESSEES SISTER CONCERN, M/S. SYNTEL LIMITED, IN ITA NO.3413/MUM/2007 DATED 31/08/2015 AT PARA 5 AND 5.1 THEREOF. THE CO-ORDINATE BENCH HAS HELD THAT INTEREST INCOME EA RNED BY THE ASSESSEE HAS A DIRECT NEXUS AND WAS DERIVED FROM TH E ASSESSEES BUSINESS AND WAS, THEREFORE, ENTITLED TO BE CONSIDE RED FOR DEDUCTION U/S.10A OF THE ACT. FOLLOWING THE AFORESAID DECISI ON OF THE CO-ORDINATE BENCH IN THE CASE OF M/S. SYNTEL LIMIT (SUPRA), WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) IN DIRECTING THE ASSESSING OFFICER TO CONSIDER THE INTEREST INCOME OF RS.53,23,340/- EARNED BY THE ASS ESSEE IN THE RELEVANT PERIOD AS HAVING A DIRECT NEXUS WITH AND B EING DERIVED FROM ITS ITES BUSINESS AND, THEREFORE, TO INCLUDE IT WHILE C OMPUTING THE ELIGIBLE DEDUCTION U/S.10A OF THE ACT. IT IS ACCORDINGLY OR DERED. CONSEQUENTLY, THE GROUNDS OF APPEAL RAISED BY REVENUE ARE DISMIS SED. 4. IN THE RESULT, THE REVENUES APPEAL FOR ASSESSME NT YEAR 2007-08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/01/2016 SD/- SD/- (RAM LAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 06/01/2016 5 ITA NO. 7610/MUM/2011 (ASSESSMENT YEAR 2007-08) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS